New bank permits on way

New Delhi, Jan. 4: Finance minister P. Chidambaram today said the government was preparing to send its comments to the Reserve Bank on new bank licences.

“We are sending our comments on banking licence to the RBI,” he said.

The RBI is working on the final guidelines on licences after Parliament approved the banking bill last month.

The bill allows the RBI to replace the boards of private banks and increase the cap on voting rights of private investors in public sector banks to 10 per cent from 1 per cent.

According to the draft guidelines on licences, business houses with a successful track record and a minimum capital of Rs 500 crore will be allowed to set up commercial banks. At present, the minimum capital requirement is Rs 300 crore.

Companies that are primarily into real estate or stock broking will not be eligible.

On foreign holding, the guidelines said the aggregate non-resident shareholding in a new bank should not exceed 49 per cent for the first five years. At present, the government allows foreign shareholding in a private sector bank up to 74 per cent of its paid-up capital.

Capital infusion

The Union cabinet will next week consider a proposal to infuse Rs 12,000 crore into public sector banks, according to finance ministry officials. The ministry has approved the investment in 12 PSU banks.